Skip to Content
Global News Select

Stocks Drift Higher Ahead of Powell Speech

By Anna Isaac 

-- Johnson & Johnson slips

-- Brent crude climbs

-- Gold prices rise

U.S. stock futures and European equities edged higher Wednesday as investors awaited the resumption of U.S.-China trade talks and looked for fresh signals from the Federal Reserve on monetary easing.

Futures tied to the Dow Jones Industrial Average rose 0.7%, a day after the latest spat between the world's two largest economies threatened to undermine trade negotiations set to resume on Thursday. The Stoxx Europe 600 rose 0.6%, led by equities in Germany.

The relatively muted optimism in markets reflects investors' wait-and-watch approach as they await new inflation data from the U.S. and the European Central Bank's account of its own latest meeting, both scheduled to be released on Thursday, said Oliver Jones, market economist at Capital Economics.

"People are waiting for headline events," Mr. Jones said. "It's a bit of quiet before movement later in the week."

Japan's benchmark Nikkei 225 index slipped 0.6% as data on machine-tool orders confirmed a bleak picture for the country's manufacturing sector.

The "numbers remain abysmal," analysts at Pantheon Macroeconomics said in a note. "The absence of any hints of a sustainable recovery suggests that industrial production in Japan, and output globally, looks set to stay subdued in year-on-year terms," they said.

Hong Kong's Hang Seng dropped 0.8% amid tensions over protests in the city. The Shanghai Composite gauge climbed 0.4%.

The U.K.'s FTSE 100 index ticked up 0.7%, a day after the pound weakened and made British assets appear more attractive.

Sterling, which fell Tuesday after U.K. leaders clashed with their European counterparts over Brexit, edged down 0.2% against the euro while remaining almost flat against the U.S. dollar.

Investors moved toward haven assets such as gold. The precious metal rose 0.4% Wednesday and remained above the $1,500 a troy ounce, a level it broke through for the first time in six years in August. It is up around 17% this year.

In U.S. premarket trading, Johnson & Johnson shares fell 2% after a Philadelphia jury ordered the company to pay $8 billion in damages to a man who said that using antipsychotic drug Risperdal caused enlarged breasts.

Later Wednesday, investors are likely to listen closely to any fresh signals from Federal Reserve Chairman Jerome Powell in a speech in Kansas City. The Fed will increase its purchases of short-term securities soon in an effort to avoid stress in lending markets, Mr. Powell said Tuesday.

If Mr. Powell persists in not ruling out a rate cut this quarter, investors may see "U.S. assets suffering relative to their neighbors," said Florian Hense, a European economist at Berenberg Bank.

The U.S. central bank will later Wednesday release the minutes from its September meeting, which will likely be scrutinized closely for any insight into the interest-rate outlook, though economic data and market events since that meeting may have changed policy makers' views.

"What the Fed minutes discuss is likely to be stale information," said Jordan Rochester, foreign exchange strategist at Nomura Bank. "The data has deteriorated since they had their discussion. After the poor manufacturing figures more recently, they softened their tones."

The benchmark for global oil, Brent crude, rose almost 1.2% to $58.94 a barrel.

Write to Anna Isaac at anna.isaac@wsj.com

 

(END) Dow Jones Newswires

October 09, 2019 08:49 ET (12:49 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.